Over 38% of Click Fraud Prevention Software Vendors Use Bogus Click Fraud Stats to Promote their Products

Another class action click fraud lawsuit:

Google (Nasdaq:GOOG - news) and its top rival, Yahoo Inc. (Nasdaq:YHOO - news), have declined to say what percentage of clicks would fall under click fraud. The figure most cited by independent firms that track the practice is around 20 percent.

Scott Boyenger, chief executive of Colorado-based Click Defense, said in an e-mail that his company's tracking system has detected click fraud rates of as high as 38 percent. The company sells software to prevent click fraud.

Joe Holcomb, from BlowSearch, also states the 38% is not unrealistic.

A few things which discourage AdWords click fraud:

• If you click a competing ad on Google you make that ad more relevant to the search query. Google discounts their click price to make up for their higher relevancy.

• By clicking on a competing ad on Google you increase your own ad costs since you must bid higher to make up for your lower ad relevancy.

There are hundreds of millions of searches each day. No way 38% of the ad clicks are fraudulent AND not detected by the engines.

Recently, at the New Orleans WMW conferences I spoke with some people who told me they intentionally clicked their own AdWords ads just to try to keep them relevant and ranking.

Those preaching about the doom caused by click fraud are not telling the whole story.

To me, doing click fraud is about the same as complaining about people ranking above you. It is a waste of energy and builds little to no longterm value. Why? You will always have competitors.

Worrying about competitors instead of focusing on building your own business and parnerships while they are busy building their business means you are falling behind. If you are spending a ton of money on PPC ads it makes sense to track it, but click fraud should not be a primary business focus if you are trying to build a legitimate long term business.

Content publishers have more incentive to do click fraud since they get a cut of the revenues, but that is why most smart people do not bid sky high on content ads. For how cheap the branding effects are, I am usually stoked just to break even on content ads. If that means I am paying for a little click fraud oh well.

Danny Sullivan posted the click fraud complaint here (18 page PDF).